825.51/3–946: Telegram
The Ambassador in Chile ( Bowers ) to the Secretary of State
[Received 3:09 p.m.]
283. Alfonso Fernández, manager Caja de Amortización confirmed to Embassy that decree reinstating full service on external debt on basis of law 5580 of January 31, 193585 had been approved and should be officially published early next week. He also confirmed that another decree would authorize issue of up to one million dollars of new external bonds with 5 percent interest and 1 percent annual amortization to be sold at not less than 90 which would probably be taken up by the Caja itself. Fernández stated that Govt plans gradually to [restore?] funds diverted from bond service since 1939 of which proposed one million dollar issue would be first step. He also said a special amortization of 2½ percent on short term dollar debt would be authorized for 1946. Detailed memo by Caja on foregoing points is being mailed to Rogers86 of Bondholders Council and Collado87 Fernández stated. Despatch will follow.
- On March 28, 1946, the Acting Secretary of State wrote to Senator Guy Cordon that the decree provided for service on the foreign debt from Government participation in the nitrate business, income tax on copper companies, and duties on oil destined for the copper and nitrate business. The proceeds were to be divided, half for interest, half for amortization. Holders of bonds who did not assent to the plan received no interest. Since 1940, the amount for amortization was diverted to earthquake relief. (825.51/3–1146)↩
- James Grafton Rogers, President of the Foreign Bondholders Protective Council, Inc.↩
- Emilio G. Collado, Director of the Office of Financial and Development Policy.↩